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AI Fears Spark $1.2B IT Stock Exodus
19 Feb
Summary
- Foreign investors sold $1.2 billion in Indian IT stocks in early February.
- AI advancements raise concerns over disruption to traditional IT services.
- Key Indian IT firms like Infosys and TCS saw shares drop over 14%.
Foreign investors have significantly reduced their exposure to Indian information technology stocks, offloading approximately 110 billion rupees ($1.2 billion) in the first half of February 2026. This withdrawal follows renewed concerns stemming from recent advancements in artificial intelligence, which have stoked fears of disruption to traditional IT outsourcing business models. Major Indian IT firms have felt the impact, with shares of Tata Consultancy Services Ltd. and Infosys Ltd. falling more than 14% year-to-date in Mumbai.
The persistent selling by foreign investors, which began in October 2024, has contributed to a broad market downturn, with technology stocks bearing the brunt. As of February 15, 2026, foreign holdings in Indian IT and services companies decreased sharply to $49.5 billion from $85.2 billion at the end of 2024. Despite this outflow, recent developments at India's AI summit, including partnerships between Infosys and Anthropic, and Tata Group and OpenAI, suggest ongoing efforts to adapt to the evolving AI landscape.
